T-Mobile Will End Subsidies Next Year, Meaning You’ll Have To Pay More Up Front For Your Next Smartphone


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T-Mobile will end smartphone subsidies in 2013 CEO John Legere said today in a presentation to analysts. We first spotted the video on GigaOm.This means you’ll have to pay full price for your phone or bring in an unlocked device. The upside is that T-Mobile will charge you less for your service plan.

However, things will be a bit different once T-Mobile starts selling the iPhone next year. Legere said T-Mobile will likely sell the iPhone for $99 up front, then charge you an extra $15 to $20 per month over 20 months to pay off the rest of the device. 

Most carriers today will only charge you about $200 for a smartphone if you agree to a two-year contract. The carriers pay the manufacturer the rest of the price up front, and your expensive service plan pays the carrier back in turn over that two-year period. T-Mobile’s new approach for 2013 is to keep your data/voice/texting plan cheap, but require you to pay for the full cost of the phone up front.

In many cases, T-Mobile’s approach will save you money in the long run. But there’s still that psychological aspect of getting a brand new phone for just $200 that T-Mobile customers will be missing out on.